IDEAS home Printed from https://ideas.repec.org/p/ssb/dispap/210.html

Did Norway Gain from the 1979-85 Oil Price Shock?

Author

Listed:

Abstract

Macroeconomic effects of the high oil prices in the period 1979-85 for the Norwegian economy are considered. An alternative low oil price scenario is developed and effects of the oil shock are calculated as the deviation between actual history and the counterfactual base. International effects based on a world model are fed into a domestic model to analyse consequences for the Norwegian economy. Without imposing any changes in fiscal policies, negative effects from lower foreign demand and higher interest rates are dominating. However, as a major oil exporting country, we argue that the high oil prices spurred a substantial increase in Norwegian public spending. Effects of a more expansionary fiscal policy, based on a relatively conservative spending strategy, are shown to more than outweigh the negative initial impact on GDP. Possible outcomes for the business cycle development are also studied

Suggested Citation

  • Torbjørn Eika & Knut A. Magnussen, 1998. "Did Norway Gain from the 1979-85 Oil Price Shock?," Discussion Papers 210, Statistics Norway, Research Department.
    • Handle: RePEc:ssb:dispap:210
    as

    Download full text from publisher

    File URL: https://www.ssb.no/a/publikasjoner/pdf/DP/dp210.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ben S. Bernanke & Mark Gertler & Mark Watson, 1997. "Systematic Monetary Policy and the Effects of Oil Price Shocks," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1), pages 91-157.
    2. Barrell, Ray & Pain, Nigel & Hurst, Ian, 1996. "German Monetary Union: An historical counterfactual analysis," Economic Modelling, Elsevier, vol. 13(4), pages 499-518, October.
    3. repec:aen:journl:1994v15-04-a02 is not listed on IDEAS
    4. Hilde Christiane Bjørnland, 1996. "The Dynamic Effects of Aggregate Demand, Supply and Oil Price Shocks," Discussion Papers 174, Statistics Norway, Research Department.
    5. Biorn, Erik & Jensen, Morten & Reymert, Morten, 1987. "KVARTS - a quarterly model of the Norwegian economy," Economic Modelling, Elsevier, vol. 4(1), pages 77-109, January.
    6. Darby, Michael R, 1982. "The Price of Oil and World Inflation and Recession," American Economic Review, American Economic Association, vol. 72(4), pages 738-751, September.
    7. Ray Barrell & Knut A. Magnussen, 1996. "Counterfactual Analyses of Oil Price Shocks using a World Model," Discussion Papers 177, Statistics Norway, Research Department.
    8. Favero, Carlo A. & Pesaran, M. Hashem, 1994. "Oil investment in the North Sea," Economic Modelling, Elsevier, vol. 11(3), pages 308-329, July.
    9. Burbidge, John & Harrison, Alan, 1984. "Testing for the Effects of Oil-Price Rises Using Vector Autoregressions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 25(2), pages 459-484, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Eika, Torbjorn & Magnussen, Knut A., 2000. "Did Norway gain from the 1979-1985 oil price shock?," Economic Modelling, Elsevier, vol. 17(1), pages 107-137, January.
    2. Brown, Stephen P. A. & Yucel, Mine K., 2002. "Energy prices and aggregate economic activity: an interpretative survey," The Quarterly Review of Economics and Finance, Elsevier, vol. 42(2), pages 193-208.
    3. Pelin ÖGE GÜNEY, 2013. "The Effects of Oil Prices Changes on Output Growth and Inflation: Evidence from Turkey," Journal of Economics and Behavioral Studies, AMH International, vol. 5(11), pages 730-739.
    4. Bunce, Alan & Carrillo-Maldonado, Paul, 2023. "Asymmetric effect of the oil price in the ecuadorian economy," Energy Economics, Elsevier, vol. 124(C).
    5. Schmidt, Torsten & Zimmermann, Tobias, 2007. "Why are the Effects of Recent Oil Price Shocks so Small?," Ruhr Economic Papers 29, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    6. Matteo Manera & Alessandro Cologni, 2006. "The Asymmetric Effects of Oil Shocks on Output Growth: A Markov-Switching Analysis for the G-7 Countries," Working Papers 2006.29, Fondazione Eni Enrico Mattei.
    7. Ahmed, Khalid & Bhutto, Niaz Ahmed & Kalhoro, Muhammad Ramzan, 2019. "Decomposing the links between oil price shocks and macroeconomic indicators: Evidence from SAARC region," Resources Policy, Elsevier, vol. 61(C), pages 423-432.
    8. Ray Barrell & Knut A. Magnussen, 1996. "Counterfactual Analyses of Oil Price Shocks using a World Model," Discussion Papers 177, Statistics Norway, Research Department.
    9. Zulfigarov, Farid & Neuenkirch, Matthias, 2020. "The impact of oil price changes on selected macroeconomic indicators in Azerbaijan," Economic Systems, Elsevier, vol. 44(4).
    10. Kashif Zaheer Malik & Haram Ajmal & Muhammad Umer Zahid, 2017. "Oil Price Shock and its Impact on the Macroeconomic Variables of Pakistan: A Structural Vector Autoregressive Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 7(5), pages 83-92.
    11. Aliyu, Shehu Usman Rano, 2009. "Oil Price Shocks and the Macroeconomy of Nigeria: A Non-linear Approach," MPRA Paper 18726, University Library of Munich, Germany, revised 16 Nov 2009.
    12. Troster, Victor & Shahbaz, Muhammad & Uddin, Gazi Salah, 2018. "Renewable energy, oil prices, and economic activity: A Granger-causality in quantiles analysis," Energy Economics, Elsevier, vol. 70(C), pages 440-452.
    13. repec:ipg:wpaper:2014-421 is not listed on IDEAS
    14. Chuku, Chuku & Effiong, Ekpeno & Sam, Ndifreke, 2010. "Oil price distortions and their short- and long-run impacts on the Nigerian economy," MPRA Paper 24434, University Library of Munich, Germany.
    15. Kilian, Lutz, 2005. "The Effects of Exogenous Oil Supply Shocks on Output and Inflation: Evidence from the G7 Countries," CEPR Discussion Papers 5404, Centre for Economic Policy Research.
    16. Emmanouil Karakostas, 2022. "What Determines the Fuel Exports: The Case of Norway," European Journal of Energy Research, European Open Science, vol. 2(1), pages 8-12, January.
    17. Anton Nakov & Andrea Pescatori, 2010. "Oil and the Great Moderation," Economic Journal, Royal Economic Society, vol. 120(543), pages 131-156, March.
    18. Awerbuch, Shimon & Sauter, Raphael, 2006. "Exploiting the oil-GDP effect to support renewables deployment," Energy Policy, Elsevier, vol. 34(17), pages 2805-2819, November.
    19. Mensi, Walid & Rehman, Mobeen Ur & Hammoudeh, Shawkat & Vo, Xuan Vinh & Kim, Won Joong, 2023. "How macroeconomic factors drive the linkages between inflation and oil markets in global economies? A multiscale analysis," International Economics, Elsevier, vol. 173(C), pages 212-232.
    20. Cologni, Alessandro & Manera, Matteo, 2008. "Oil prices, inflation and interest rates in a structural cointegrated VAR model for the G-7 countries," Energy Economics, Elsevier, vol. 30(3), pages 856-888, May.
    21. Lee, Byung Rhae & Lee, Kiseok & Ratti, Ronald A., 2001. "Monetary policy, oil price shocks, and the Japanese economy," Japan and the World Economy, Elsevier, vol. 13(3), pages 321-349, August.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ssb:dispap:210. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: L Maasø (email available below). General contact details of provider: https://edirc.repec.org/data/ssbgvno.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.